Alongside the growing popularity of crypto-assets, lending and borrowing have emerged as a leading use case in this domain. Consequently, there’s an increasing need for a unified credit rating which can be leveraged for several purposes, including risk assessment and mitigation.
Traditionally, credit ratings are available for a range of asset classes including stocks, but not for crypto-assets. Yet, the novel incorporation of a credit rating system to cryptocurrency is a foolproof way of making this asset class even more credible for clients and investors alike.
In this context, Hybrid Bank has developed a first-of-its-kind digital identity and credit rating system. It provides users the opportunity to extend the benefits of credit rating to cryptocurrency and utilize it in real life. Hybrid Bank’s credit rating system is poised to be a phenomenal experience offering users unforeseen control, security, and privacy.
Achieving a Good Credit Score
With increased control and visibility options, the onus of maintaining a good score progressively falls on the user. The following section is an attempt at demystifying the veiled process of building a good score.
Opening Credit Lines
Building good credit is a gradual process, but the first step to steady growth always starts at opening a line of credit. That is, actually applying for cryptocurrency loans. The ease-of-access for first-time cryptocurrency borrowers is a substantial relief, as opposed to traditional lending where banks and lenders tend to reject propositions that lack credit history.
Cryptocurrency lending addresses the risk of defaulting on loans by offering lenders significant collaterals and competitive interest rates. Furthermore, as a blockchain-based service, crypto lending and borrowing facilities are assured to even the global unbanked populations, thus making credit accessible to first-time borrowers and eliminating gatekeepers.
The traditional credit rating system requires users to pay a reasonable sum of money for accessing its services, apart from the free annual credit report mandated by the Fair Credit Reporting Act. In order to be able to regularly track credit history and reports, users have to avail the facility provided by paid third party monitoring services, which again, involves the unwanted risk of having to share valuable financial and banking information with third parties.
On the contrary, Hybrid Bank offers real-time monitoring of scores, data updates as and when the borrowing-lending transactions are completed, and extends data sharing rights to the user. Access to credit history is vital as a good credit score depends on the user being able to make foolproof future borrowing decisions while also being able to understand risk factors that affect the user’s score.
Hybrid Bank’s Credit Service
In the context of credit scores, the rule of thumb is to pay all your credit dues on time, as agreed. Defaulting on loans can have considerable damaging effects on your credit history. Payments made to creditors in the past are a massive factor affecting your future success with lending. A reliable borrower with a good credit history and score will automatically benefit from lessened interest rates and collaterals.
Hybrid Bank’s credit information system is a state-of-the-art facility that enables quantitative assessments. Apart from real-time tracking of buy/sell orders made from the borrower’s wallet, the platform maintains a robust quality check. Users — lenders and borrowers — can better gauge the future possibilities of revenue generation, as well as the feasibility of any given roadmap. In all, Hybrid Bank’s credit service provides an intensive input into better risk assessment and other factors that affect credit scores.